Association Health Plans Act of 2019

II 116TH CONGRESS 1ST SESSION S. 1170 To amend the Employee Retirement Income Security Act of 1974 to establish additional criteria for determining when employers may join together in a group or association of employers that will be treated as an employer under section 3(5) of such Act for purposes of sponsoring a group health plan, and for other purposes. IN THE SENATE OF THE UNITED STATES APRIL 11, 2019 Mr. ENZI (for himself, Mr. ALEXANDER, Mr. BARRASSO, Mr. CORNYN, Mr. ISAKSON, Mr. BRAUN, Mr. BLUNT, Mrs. CAPITO, Mr. INHOFE, Ms. MCSALLY, Mr. THUNE, Mr. SASSE, Mr. ROMNEY, Mrs. HYDE-SMITH, Mr. GRASSLEY, Mr. CRAMER, Mr. KENNEDY, Mr. SCOTT of South Caro- lina, Ms. ERNST, Mr. PERDUE, Mr. WICKER, Ms. MURKOWSKI, Mr. DAINES, Mr. LANKFORD, and Mr. GRAHAM) introduced the following bill; which was read twice and referred to the Committee on Health, Edu- cation, Labor, and Pensions A BILL To amend the Employee Retirement Income Security Act of 1974 to establish additional criteria for determining when employers may join together in a group or associa- tion of employers that will be treated as an employer under section 3(5) of such Act for purposes of sponsoring a group health plan, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 VerDate Sep 11 2014 20:07 Apr 22, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S1170.IS S1170 pamtmann on DSKBFK8HB2PROD with BILLS 2 •S 1170 IS SECTION 1. SHORT TITLE. 1 This Act may be cited as the ‘‘Association Health 2 Plans Act of 2019’’. 3 SEC. 2. FINDINGS. 4 Congress finds the following: 5 (1) Association health plans allow small busi- 6 nesses to band together on a regional or national 7 basis and leverage their combined power to obtain 8 the health benefits they want and need, at a price 9 they can afford. 10 (2) Small business owners have experienced av- 11 erage premium decreases of up to 29 percent under 12 an association health plan. 13 (3) Association health plans are governed under 14 the same rules that apply to employer-sponsored in- 15 surance arrangements for large employers utilized by 16 more than 160,000,000 Americans. 17 (4) Important consumer protections established 18 on a bipartisan basis under the Employee Retire- 19 ment and Income Security Act of 1974, the Health 20 Insurance Portability and Accountability Act of 21 1996, and the Consolidated Omnibus Budget Rec- 22 onciliation Act of 1985 apply to association health 23 plans. 24 (5) Association health plans comply with re- 25 quirements for large employer health plans under 26 VerDate Sep 11 2014 20:07 Apr 22, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S1170.IS S1170 pamtmann on DSKBFK8HB2PROD with BILLS 3 •S 1170 IS the Public Health Service Act, as amended by the 1 Patient Protection and Affordable Care Act. 2 (6) Association health plans cannot limit plan 3 eligibility on the basis of medical history, health sta- 4 tus, claims experience, or genetic information. 5 (7) Fully insured association health plans must 6 comply with State benefit mandates. 7 (8) Self-insured association health plans are 8 subject to State multiple-employer welfare arrange- 9 ment laws. 10 (9) The Secretary of Labor used its rulemaking 11 authority to issue a final rule on June 21, 2018, to 12 expand access to association health plans for Amer- 13 ican small businesses and working families, includ- 14 ing self-employed business owners. 15 (10) The Secretary of Labor required associa- 16 tion health plans formed under the final rule to com- 17 ply with even stronger nondiscrimination protections 18 than the nondiscrimination protections under Fed- 19 eral law prior to the final rule. 20 (11) On March 28, 2019, a Federal district 21 judge vacated the Secretary of Labor’s final rule, 22 threatening to disrupt coverage for current enrollees 23 and restrict the ability of small businesses and work- 24 VerDate Sep 11 2014 20:07 Apr 22, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S1170.IS S1170 pamtmann on DSKBFK8HB2PROD with BILLS 4 •S 1170 IS ing families to band together to obtain affordable 1 and high quality plans in the future. 2 (12) Health care is one of the most important 3 issues facing American families, and small business 4 owners and self-employed Americans want secure 5 and affordable association health plans to provide 6 comprehensive coverage for themselves and their 7 families. 8 SEC. 3. DEFINITION OF ‘‘EMPLOYER’’ UNDER ERISA WITH 9 RESPECT TO GROUP HEALTH PLANS. 10 (a) DEFINITION OF EMPLOYER.—Section 3(5) of the 11 Employee Retirement Income Security Act of 1974 (29 12 U.S.C. 1002(5)) is amended by striking the period and 13 inserting ‘‘(which, with respect to a group health plan, 14 shall be determined in accordance with criteria that in- 15 cludes the criteria under section 735).’’. 16 (b) GROUP HEALTH PLANS.—Part 7 of subtitle B 17 of title I of the Employee Retirement Income Security Act 18 of 1974 (29 U.S.C. 1181 et seq.) is amended by adding 19 at the end the following: 20 ‘‘SEC. 735. DEFINITION OF ‘EMPLOYER’ WITH RESPECT TO 21 GROUP HEALTH PLANS. 22 ‘‘(a) IN GENERAL.—A group or association of em- 23 ployers that meets the criteria under subsection (b) shall 24 VerDate Sep 11 2014 20:07 Apr 22, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S1170.IS S1170 pamtmann on DSKBFK8HB2PROD with BILLS 5 •S 1170 IS be considered an employer under section 3(5) for purposes 1 of sponsoring a group health plan. 2 ‘‘(b) REQUIREMENTS.—The requirements under this 3 subsection are each of the following: 4 ‘‘(1) The primary purpose of the group or asso- 5 ciation may be to offer and provide health coverage 6 to its employer members and their employees, if 7 such group or association has at least 1 substantial 8 business purpose, as described in subsection (c), un- 9 related to offering and providing health coverage or 10 other employee benefits to its employer members and 11 their employees. 12 ‘‘(2) Each employer member of the group or as- 13 sociation participating in the group health plan is a 14 person acting directly as an employer of at least 1 15 employee who is a participant covered under the 16 plan. 17 ‘‘(3) The group or association has— 18 ‘‘(A) a formal organizational structure 19 with a governing body; and 20 ‘‘(B) by-laws or other similar indications of 21 formality. 22 ‘‘(4) The functions and activities of the group 23 or association shall be controlled by the employer 24 members of the group or association, and the em- 25 VerDate Sep 11 2014 20:07 Apr 22, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S1170.IS S1170 pamtmann on DSKBFK8HB2PROD with BILLS 6 •S 1170 IS ployer members of the group or association that par- 1 ticipate in the group health plan shall control the 2 plan. Control under this paragraph shall be in form 3 and substance. 4 ‘‘(5) The employer members shall have a com- 5 monality of interest as described in subsection (d). 6 ‘‘(6)(A) The group or association shall not 7 make health coverage through the group health plan 8 available other than to— 9 ‘‘(i) an employee of a current employer 10 member of the group or association; 11 ‘‘(ii) a former employee of a current em- 12 ployer member of the group or association who 13 became eligible for coverage under the group 14 health plan when the former employee was an 15 employee of the employer; and 16 ‘‘(iii) a beneficiary of an individual de- 17 scribed in clause (i) or (ii), such as a spouse or 18 dependent child. 19 ‘‘(B) Notwithstanding subparagraph (A), the 20 group or association shall not make health coverage 21 through the group health plan available to any indi- 22 vidual (or beneficiaries of the individual) for any 23 plan year following the plan year in which the plan 24 determines pursuant to reasonable monitoring proce- 25 VerDate Sep 11 2014 20:07 Apr 22, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S1170.IS S1170 pamtmann on DSKBFK8HB2PROD with BILLS 7 •S 1170 IS dures described in subsection (f)(2)(C) that the indi- 1 vidual ceases to meet the conditions described in 2 subsection (f)(2) for being a working owner (unless 3 the individual again meets those conditions), except 4 as may be required by section 601. 5 ‘‘(7) The group or association, and any health 6 coverage offered by the group or association, shall 7 comply with the nondiscrimination provisions under 8 subsection (e). 9 ‘‘(8) The group or association shall not be a 10 health insurance issuer, or owned or controlled by 11 such a health insurance issuer or by a subsidiary or 12 affiliate of such a health insurance issuer, other 13 than to the extent such entities participate in the 14 group or association in their capacity as employer 15 members of the group or association. 16 ‘‘(c) SUBSTANTIAL BUSINESS PURPOSE.— 17 ‘‘(1) IN GENERAL.—For purposes of subsection 18 (b)(1), a substantial business purpose shall exist if 19 the group or association would be a viable entity in 20 the absence of sponsoring an employee benefit plan. 21 ‘‘(2) BUSINESS PURPOSE.—For purposes of 22 subsection (b)(1) and paragraph (1), a business pur- 23 pose shall— 24 VerDate Sep 11 2014 20:07 Apr 22, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S1170.IS S1170 pamtmann on DSKBFK8HB2PROD with BILLS 8 •S 1170 IS ‘‘(A) include promoting common business 1 interests of the members of the group or asso- 2 ciation or the common economic interests in a 3 given trade or employer community; and 4 ‘‘(B) not be required to be a for-profit ac- 5 tivity. 6 ‘‘(d) COMMONALITY OF INTEREST.— 7 ‘‘(1) IN GENERAL.—Subject to paragraph (3), 8 employer members of the group or association shall 9 be treated as having a commonality of interest for 10 purposes of subsection (b)(5) if— 11 ‘‘(A) the employers are in the same trade, 12 industry, line of business, or profession; or 13 ‘‘(B) each employer has a principal place 14 of business in the same region that does not ex- 15 ceed the boundaries of a single State or a met- 16 ropolitan area (even if the metropolitan area in- 17 cludes more than 1 State). 18 ‘‘(2) SAME TRADE, INDUSTRY, OR LINE OF 19 BUSINESS.—In the case of a group or association 20 that is sponsoring a group health plan under this 21 section and that is itself an employer member of the 22 group or association, the group or association shall 23 be deemed for purposes of paragraph (1)(A) to be 24 in the same trade, industry, line of business, or pro- 25 VerDate Sep 11 2014 20:07 Apr 22, 2019 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S1170.IS S1170 pamtmann on DSKBFK8HB2PROD with BILLS 9 •S 1170 IS fession, as applicable, as the other employer mem- 1 bers of the group or association. 2 ‘‘(3) NONDISCRIMINATION.—The standards 3 under paragraph (1) shall not be implemented in a 4 manner that is subterfuge for discrimination as is 5 prohibited under subsection (e). 6 ‘‘(e) NONDISCRIMINATION.— 7 ‘‘(1) IN GENERAL.—A group or association of 8 employers sponsoring a group health plan under this 9 section, and any health coverage sponsored by such 10 group or association, shall comply with each of the 11 following: 12 ‘‘(A) The group or association shall not 13 condition employer membership in the group or 14 association on any health factor of any indi- 15 vidual who is or may become eligible to partici- 16 pate in the group health plan sponsored by the 17 group or association. 18 ‘‘(B) The group health plan sponsored by 19 the group or association shall comply with the 20 rules under section 2590.702(b) of title 29, 21 Code of Federal Regulations (as in effect on 22 June 21, 2018), with respect to nondiscrimina- 23 tion in rules for eligibility for benefits, subject 24 to subparagraph (D). 25 VerDate Sep 11 2014 20:07 Apr 22, 2019 Jkt 089200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S1170.IS S1170 pamtmann on DSKBFK8HB2PROD with BILLS 10 •S 1170 IS ‘‘(C) The group health plan sponsored by 1 the group or association shall comply with the 2 rules under section 2590.702(c) of title 29, 3 Code of Federal Regulations (as in effect on 4 June 21, 2018), with respect to nondiscrimina- 5 tion in premiums or contributions required by 6 any participant or beneficiary for coverage 7 under the plan, subject to subparagraph (D). 8 ‘‘(D) In applying subparagraphs (B) and 9 (C), the group or association may not treat the 10 employees of different employer members of the 11 group or association as distinct groups of simi- 12 larly situated individuals based on a health fac- 13 tor of 1 or more individuals. 14 ‘‘(2) DEFINITION OF HEALTH FACTOR.—For 15 purposes of this subsection, the term ‘health factor’ 16 has the meaning given such term in section 17 2590.702(a) of title 29, Code of Federal Regulations 18 (as in effect on June 21, 2018). 19 ‘‘(f) DUAL TREATMENT OF WORKING OWNERS AS 20 EMPLOYERS AND EMPLOYEES.— 21 ‘‘(1) IN GENERAL.—A person determined in ac- 22 cordance with paragraph (2) to be a working owner 23 of a trade or business may qualify as both an em- 24 ployer and as an employee of the trade or business 25 VerDate Sep 11 2014 20:07 Apr 22, 2019 Jkt 089200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\S1170.IS S1170 pamtmann on DSKBFK8HB2PROD with BILLS 11 •S 1170 IS for purposes of the requirements under subsection 1 (b), including the requirements under paragraphs 2 (2) and (6) of such subsection. 3 ‘‘(2) WORKING OWNER.— 4 ‘‘(A) ELIGIBILITY.—A person shall qualify 5 as a ‘working owner’ if a responsible fiduciary 6 of the group health plan reasonably determines 7 that the person— 8 ‘‘(i) does not have any common law 9 employees; 10 ‘‘(ii) has an ownership right of any 11 nature in a trade or business, whether in- 12 corporated or unincorporated, including a 13 partner and other self-employed individual; 14 ‘‘(iii) is earning wages or self-employ- 15 ment income from the trade or business 16 for providing personal services to the trade 17 or business; and 18 ‘‘(iv) either— 19 ‘‘(I) works on average at least 20 20 hours per week, or at least 80 hours 21 per month, providing personal services 22 to the person’s trade or business, or 23 ‘‘(II) has wages or self-employ- 24 ment income from such trade or busi- 25 VerDate Sep 11 2014 20:07 Apr 22, 2019 Jkt 089200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\S1170.IS S1170 pamtmann on DSKBFK8HB2PROD with BILLS 12 •S 1170 IS ness that at least equals the person’s 1 cost of coverage for participation by 2 the person, and any covered bene- 3 ficiaries, in the group health plan 4 sponsored by the group or association 5 in which the person is participating. 6 ‘‘(B) DETERMINATION.—The determina- 7 tion under subpa [Text truncated for display. Full text available on Congress.gov.]